Jabal Omar Development Company, the property company behind a mixed-use
project in Makkah, is to pay Saudi Oger more than SR588m ($157m) to terminate
its contract after the two sides failed to agree on a price for a lump sum on
The project comprises the construction of three luxury
hotels, hundreds of shops and air-conditioned prayer facilities for 100,000
worshippers, as well as housing, close to the Grand Mosque. Work on the first
phase, which is scheduled to take 24 months, will overlook Ibrahim Al Khalil
Jabal Omar said Wednesday it will pay off Saudi Oger – one of
Saudi Arabia’s biggest builders - for work completed so far on the northern
part of the project to take back control of the northern part of the project.
The listed developer was created four years ago by Makkah
Construction & Development Company specifically for the project. Despite raising
SR500m in an initial public offering in 2007 the project has seen stalled
development in the last few years through an inability to raise further
financing. The company made a net loss of SR37m last year.
But in October, it finally secured $1.5bn loan from four
banks to help speed construction.
The company’s chairman, Abdul Rahman Faqeeh, also indicated
that it may mobilise around SR3bn through sukuks if needed. The project
is part of Makkah Development Authority's plan to develop Makkah's central
region by 2020, to accommodate rising numbers of pilgrims and improve
In December Jabal Omar awarded a SR3.4bn contract to Nesma
& Partners Contacting Company to work on the first phase of the project.
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